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Google Q1 Comment: CapEx Line

One Google Q1 item that caught my attention had to do with the capex
line. After running up capital expenditures to $345-million in Q1, that
pace looks set to continue, with Google cautioning that capital
expenditures growth will “substantially” outpace revenue growth going
forward. Most of that is going to IT infrastructure, showing just how
difficult it is to build a scalable back-end for a service like
Google’s.

Comments

Paul, what do you think this might mean for how many servers Google is buying per quarter?
Back of the envelope, I am wondering if they might be buying as many as 100k or 200k servers/quarter, assuming commodity servers and most of the capex is on servers.
What are your thoughts on this?

It’s an arms race, and Google appears to be at least a couple years ahead of the competition in the infrastructure build-out, not to mention the distributed computing know-how.
On the analyst call, George Reyes said:
“We continue to invest aggressively in our global infrastructure, which we believe is one of our most important competitive advantages. In Q1, CapEx was 345 million. We expect that CapEx growth rate in 2006 will be substantially greater than the revenue growth rate for the year.”
Last year’s capex was $838M plus $600M in R&D. For this year’s investment to exceed the revenue growth rate of 79%, that would be a minimum of $1,500M in capex and $1,000M in R&D.
How many servers is that?
Microsoft says they’re planning to invest a “staggering amount of money” in data centers as well, for their answer to the Google Grid, Live Drive.
I don’t know about Sun, but it seems that Intel, AMD, Juniper and Micron might benefit from this massive spending.